1. Zambia’s Electricity Potential “Seizing the Opportunity”
By Chilewe Siakasiya
Introduction
Zambia’s economic growth has over the years been driven by a few key sectors such as
agriculture, manufacturing, construction, tourism and mining. These sectors have been
contributing to the generation of both domestic as well as foreign revenue which saw the country
record an average annual growth rate of 7% between 2000 and 2014.
However, 2015 saw a significant reduction in economic growth from a projected 7% to an
estimated 3.7% by the end of the year. Some of the factors that lead to this lower than expected
growth included a significant fall in global commodity prices that negatively impacted the
mining sector and poor rainfall which resulted in lower than expected yields in the agriculture
sector.
The poor rainfall also had a negative impact on electricity generation which is one of the
important drivers of the country’s key economic sectors. Consequently, lower power supply due
to load shedding affected production output in a number of industries resulting in some job
losses as well as contributing to lower overall growth in the country’s Gross Domestic Product
(GDP).
Zambia’s Electricity Potential
Zambia is estimated to have the potential to produce about 6,000 megawatts of hydro electric
power from its water resources. Currently, the country has an installed hydro capacity of about
2,209 megawatts. The country also enjoys many hours of sunlight across all seasons meaning
that potential exists to produce power using solar energy. Added to this, the country can also tap
into its windy weather and thus produce some power from that source. These additional
resources could well add to its hydro power potential and help to drive economic growth.
The country, through the 2013 Indutrialisation and Job Creation Strategy Paper prioritized four
growth sectors of tourism, manufacturing, construction and agriculture in order to create about
one million jobs over a five year period. This strategy can be said to be one that could help to
move the country towards achieving a diversified economy in an accelerated manner, which has
become key in maintaining sustained growth in light of the global challenges experienced in the
most recent past. In achieving this ambitious strategy, one of the key infrastructure investments
required is that of increasing the country’s power generation output.
Seizing the Opportunity
It is estimated that only 25% of Zambia’s population and only 5% of its rural population have
access to on grid electricity. The country’s demand for power for both domestic and commercial
purposes is projected to rise to nearly 3, 000 megawatts by the year 2020. This means that the
country still has a long way to go in meeting its demand for power.
Zambia as a country is part of the Southern Africa Power Pool (SAPP) which draws its
membership from 12 countries in the sub-region including Angola, Botswana, Democratic

2. Republic of Congo, Lesotho, Malawi, Mozambique, Namibia, South Africa, Swaziland,
Tanzania, Zambia and Zimbabwe. The majority of these countries are able to share and trade
power amongst themselves through an existing interconnector.
It is estimated that demand amongst the SAPP member countries stands at around 55, 000
megawatts of power with an installed capacity of about 46, 000 megawatts. This means that the
SAPP is running at a deficit of about 8, 000 megawatts of power. However, investments in new
electricity projects over the next five years are expected to increase generation capacity by about
24, 000 megawatts thus enabling the region to meet its demand for power.
It is clear that the potential presented by both local and regional demand can be tapped into for
the benefit of Zambia in the medium to long term. On the local front, investment into power
generation will bring immediate benefits such as additional jobs both direct as well as indirect
throughout the cycle from project initiation, financing, construction and operation. Power will be
made available to help drive micro, small, medium and large businesses thus enabling the
country to achieve higher economic growth. While on the regional front, this will help to earn the
country additional export revenue thus helping to stabilize and strengthen the local currency.
Cost Considerations and Options
It is encouraging to note that efforts are already being made to tap into the existing power
generation potential including projects such as the 750 megawatts Kafue Gorge Lower Hydro
Station and the 600 megawatts Solar Plant at the Lusaka South Multi-Facility Economic Zone
(LS-MFEZ). However, there is need to accelerate the development of our power generation
capacity by engaging in private public partnerships (PPPs).
It is no secret that developing these power projects comes at great cost, with the most recent
example being that of the 750 megawatts Kafue Gorger Lower Hydro Station, which is estimated
to gobble $2 Billion. This means that for us to develop the remaining untapped hydro power
potential alone, we would need an amount in the region of $10 Billion.
Although this amount seems enormous, I think that it is possible to raise this using all available
options such as equity or debt financing among others. The country’s good economic
performance and its relatively stable political as well as social environment have continued to
raise our profile on the international stage. What we need to do is, leverage on this positive
outlook in order to raise the required funding, by using a mix of domestic and foreign financing
through partnerships, using special purpose vehicles (SPVs) which can create benefits for
ordinary citizens as well.
We could also consider reprioritising spending on some non critical road infrastructure projects
that do not add immediate economic benefits and instead invest in building electricity power
stations that can bring returns within a shorter turnaround time.
Conclusion
In my last article, titled, Zambia’s Electricity Deficit “Paradigm shift, a matter of necessity”, I
did highlight the fact that, we as a people need to consider moving towards use of alternatives
such as solar to meet our power needs. I believe that this needs to done through some form of
affirmative action by the Government, working with all stakeholders including consumers of this
power.

3. We need to, if impossible, attract investors that can open up factories to mass produce things
such as solar panels, inverters, batteries, wind generators and other hydro electric power
alternative products. The investors can be given generous incentives which may in the short term
mean loss of possible tax revenue but will result in long term benefits.
What this means is that, over time, we will move towards making more of our current and
potential power available for export purposes. These exports could be used as a trade off to
maintain subsidized tariffs for local power consumption by both domestic but more especially
commercial consumers.
I believe that it is possible for us to seize the opportunity by transforming our electricity potential
into a major income earner for the country and ensure a better future for all.
References:
1. ZamBanker, January to December 2015, A Bank of Zambia (BOZ) Journal
2. Energy Sector Profile, 2014 by the Zambia Development Agency (ZDA)
3. Strategy Paper on Industrialization and Job Creation, July 2013
4. 2016 Budget Address By Hon. Alexander B. Chikwanda M.P, Minister Of Finance